Malta is rapidly becoming a hub for cryptocurrency, being named by many as the ‘Blockchain Island’. Josef Mercieca of BDO Malta has outlined some of the tax implications for investors and traders, stating that ‘tax exemption is applicable only for capital transactions which are not security tokens’.
Tax in crypto has been a contentious issue since the inception of Bitcoin, with a survey this year claiming that 46% of crypto traders in the USA haven’t declared their profits to the IRS.
In the United States, traders must pay tax on every capital transaction, including cryptocurrency. In Malta, on the other hand, there is a different framework in place.
Speaking at the Malta Blockchain Summit, Mercieca said: “Capital transactions will only be taxable if they fall within the parameters of the assets and the transactions which bring taxability. So if you have a security token, they will be subject to a tax charge.”
He continued: “For cryptocurrency, you have utility tokens which do not participate in the profit of a company; these fall completely outside the scope of Malta’s tax framework.”
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